✨ Financial Statements Notes
24 JULY 2009 NEW ZEALAND GAZETTE, No. 107 2457
TSB Community Trust
Notes to the Financial Statements
For the year ended 31 March 2009
- Statement of Accounting Policies continued
Specific Accounting Policies continued
i) Held-to-Maturity
Bonds with fixed or determinable payments and fixed maturity dates that the Trust has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective interest basis. Government bonds are designated as held-to-maturity investments.
ii) Loans and Receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate. Bank deposits of more than 3 months duration are included in this classification.
Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount of the financial asset.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit and loss, are assessed for indicators for impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Trust's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.
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NZ Gazette 2009, No 107
✨ LLM interpretation of page content
🏢
TSB Community Trust Statement of Accounting Policies
(continued from previous page)
🏢 State Enterprises & Insurance30 June 2009
Accounting Policies, Financial Statements, Held-to-Maturity, Loans, Receivables, Effective Interest Method, Impairment